Lies, Damned Lies and the Law of Averages

One of the ardent faiths I hold in my profession is that averages in real estate are not worth much outside the context of the data analyzed, especially when it comes to single family residential in the Bay Area. Condos, by nature, are more uniform and thus more likely to trade at consistent, predictable prices. Areas like Arizona which have new neighborhoods full of uniform new homes may act similarly. Detached homes in the Bay Area, however, are far less constricted in terms of its inherent variation in value based on building quality and location.

Therefore, relying on the statistics heralded but not backed by a dataset is dicey, at best.

Consider the headline offered online in the San Francisco Chronicle barking:

“SF Values are now Lower than this East Bay city”.

https://www.sfchronicle.com/bayarea/article/home-dublin-san-francisco-18462299.php

On the surface this sounds like something Fox News would happily repost, albeit reworded thus:

“Suburb’s gains Proof of SF’s Imminent Implosion”

No data is included, so I dug up what is available on MLS using the months of August and September of this year. As close as I could get to making the above a reality was to search for detached homes in this period, eliminating any data points above 8 million dollars (there were 4 in SF during this period). Once you remove those pesky outliers and you can shave an extra quarter million off the average sales price of a single-family home, bringing the average down to 1.970 million in SF. Comparatively, all detached homes sold in Dublin for under 8 million dollars in the same period is 1.983 million.

Voila!

Except – if you are removing outliers in SF, should you also take out the lowest ones? A quick glance reveals a few properties miscategorized as detached when they are in fact TIC or HOA dependent. Should we proceed with that correction, we can expect our averages to move further from par, with the average price of an SF home creeping higher.

But assuming we let the comparison stand and say, with a grain of confidence given the dataset at hand, that the average sale price of a single-family home in Dublin exceeded that of San Francisco between August and September of 2023. What, if anything, does this reveal about said house we are purchasing for nearly 2 million?

Removing data points for homes without listed square footage (15 of 196) the average size home sold in SF was 2032 sqft, with a low of 650 and a high of 6670.

In Dublin, all 37 listings had square footage information, revealing an average of 2629 sqft, with a low of 1166 and a high of 4415.

The average price per square foot in SF during this period was $980, with a low of $303 and a high of $2,131.

The average price per square foot in Dublin during this period was $790, with a low of $545 and a high of $1187.

The average age of a home sold during the period in San Francisco (when provided) was 1931.

The average age of a home sold during the period in Dublin was 2000.

Apples and oranges, or harbinger of the inexorable damnation of the America’s number one liberal freehold?

While the latter sells would presumably sell more papers, I’m willing to throw my two cents in for the former.

“Large New Suburban Home Sells at Same Price as Charming 100-Year-Old Two Bedroom in City Center”

While accurate, the Doomsday punch is lacking. 

https://www.realtor.com/realestateandhomes-detail/M1296275069

https://www.realtor.com/realestateandhomes-detail/M2257248813